ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Thursday, December 12, 1996            TAG: 9612120036
SECTION: BUSINESS                 PAGE: B-10 EDITION: METRO 
SOURCE: JEFF STURGEON STAFF WRITER

CLOTHIER FACING LAWSUITS DONNKENNY SAID TO FALSIFY PROFITS

A New York clothing company that makes some of its goods in Southwest Virginia has been accused in at least three shareholder lawsuits of falsifying profits.

The lawsuits filed last month in U.S. District Court for the Southern district in New York accuse Donnkenny Inc. of misrepresenting its performance on financial statements it must release quarterly because it is a public company.

Donnkenny had no comment on any of the suits, because it still is reviewing the allegations, Harvey Horowitz, corporate counsel in New York, said Wednesday.

The company designs, makes and markets moderately priced women's sportswear. It distributes goods from Wytheville; does manufacturing in Dryden, Floyd, Haysi and Independence; performs cutting at a second Floyd location; and runs New River Finishing Co. in Christiansburg.

Donnkenny said in September it would update earlier figures for 1995 and the first two quarters of 1996. Early last month, Donnkenny's auditors resigned and it reassigned three financial officers.

Frederic Fox, one of the plaintiff's lawyers, said the company's initial financial reports made Donnkenny appear more successful than it was and prompted an increase in the price of its stock. Donnkenny's shares, traded on the Nasdaq stock exchange, closed Wednesday at $4.18 3/4, down 12 1/2 cents.

Through litigation, Fox said, he hopes to force the company to compensate investors who bought stock between Feb. 14, 1995, and early November 1996 for the extra expense they allegedly incurred.

He said the case is a proposed class action open to shareholders who bought shares during that time. Two other proposed class action lawsuits are open to shareholders who purchased during slightly different periods.

The company reported profits of $4.6 million, or 44 cents per share, on sales of $86.8 million during this year's third quarter.

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